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How does Accruals work with Paid Time Off - Part II

by Deepa 16. July 2018 11:40

Companies offer paid time leave to employees as part of their benefit. Most of these vacations are given as a credit of time worked. For example, a company can give an employee 12 hours of sick time every month. If the employee does not get sick on a particular month, the leave may get accrued into an account that can be used later. There are various possibilities:

  1. Employees accrue PTO that can be cashed out at the end of the year (if not used).

  2. Only a certain number of PTOs can be transferred to the next year.

  3. If PTO is accrued at the beginning of the month or end of the month. If the employee joins in the middle of the month, it could be prorated.

PTO Accrual Scenarios:

  1. John joined the company on Jan 15, 2018, and is allocated 1.5 days of sick leave every month that expires at the end of the year.

If we assume the following:

    1. John has not claimed any sick leave so far

    2. Leave is accrued at the beginning of every month

    3. It is prorated

On July 1, 2018, John will have 0.75 days of leave accrued for January and 1.5 days of leave from February to July totaling 9.75 days (78 hours).

  1. Mary gets vacation leave of 2 days every month and only 10 days of such leave can be rolled over to the next year. If we assume that:

    1. Mary already had 5 days of vacation rolled over from last year

    2. Leave is accrued at the end of the month

    3. Mary has already taken 3 days of vacation in this year

On July 1, 2018, Mary will have 5 days from the last year, 2 days for every month from January to June and 3 days subtracted totaling 14 days of vacation accrued.

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